For consumers, one of the more confusing aspects of consumer service contracts are legal provisions that automatically renew the contract at the end of the contract’s term. This is particularly frustrating when new charges are invoiced to a credit card or other payment source. A consumer believes the service is for a month or a year, but, suddenly a charge appears and the service has been automatically extended. Sometimes, this can result in severe financial consequences if the automatic renewal charges cause a non-sufficient funds or overdraft charge to be incurred.

Many state legislatures have recognized the problem and have enacted consumer protection statutes dealing with these types of automatic renewal in consumer contracts. These tend to go further than the federal Restore Online Shoppers’ Confidence Act (“ROSCA”) which was enacted in 2010. Part of the ROSCA dealt with automatic renewal provisions. Under ROSCA, such provisions are termed “negative option features.” This is a type of feature where a consumer’s silence or failure to take action is deemed by the seller as an acceptance of the renewal option. Under ROSCA, such features are prohibited unless:

• The feature is clearly and conspicuously disclosed
• Express and informed consent is obtained in advance and
• Consumers have a “simple mechanisms” to stop recurring charges

Colorado enacted a law that took effect at the beginning of 2022 that is modeled after ROSCA but goes further. The Colorado automatic renewal law applies to any sort of consumer contract and applies regardless of how “negative option feature” is defined. Rather, application of the law depends on whether the contract contains an auto-renewal provision/feature. Like ROSCA, the Colorado statute requires that all renewal terms AND cancellation features must be explained to consumers in a manner that is “clear and conspicuous.” Consent is needed before any charges can be taken from credit cards or other financial instruments. In addition, there must be an “easy” method of opting out and/or terminating the auto renewal. Further, if the automatic renewal is for month-to-month services, the provider must provide monthly notice of the renewals — called a “monthly reminder.” For contracts and services that auto-renew on a term longer than month-to-month, the reminder must be sent 25 to 45 days before the auto-renewal date. Finally, the Colorado statute bans contracts that have payment periods exceeding two years and requires that an auto-renewal contract must be released if the customer dies or becomes disabled.

The Colorado law is very broad — unlike some state statutes — and basically applies to any consumer contract with an auto-renewal feature. The statute applies to services and to contracts for continuous shipment/provision of goods and products.

In terms of enforcement, there is no private right of action. Enforcement is handled by the Colorado Attorney General’s Office.

Contact the Auto-Renewal Contract Attorneys at Revision Legal

For more information, contact the experienced Automatic Renewal Contract Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

Compliance Requirements in Detail

Colorado’s automatic renewal statute, Colo. Rev. Stat. section 6-1-732, imposes specific disclosure and consent requirements on businesses offering consumer contracts with auto-renewal provisions. While the prior discussion covered the major structural requirements — clear and conspicuous disclosure, informed consent, easy cancellation, and monthly or periodic reminders — several operational compliance details deserve additional attention.

What Clear and Conspicuous Means Under Colorado Law

The Colorado statute requires that auto-renewal terms be disclosed in a clear and conspicuous manner. The statute defines this as in larger type than surrounding text, in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language. For online contracts, the auto-renewal terms cannot be buried in a general terms-of-service agreement that requires scrolling to locate.

The Two-Year Maximum Payment Period

One provision unique to the Colorado statute is the prohibition on contracts with payment periods exceeding two years. A Colorado auto-renewal contract cannot require a consumer to commit to payments for a period longer than two years without the consumer being given an annual opportunity to cancel. This provision prevents businesses from locking consumers into effectively perpetual financial obligations.

For businesses that offer multi-year service contracts — equipment maintenance agreements, software licenses, security monitoring contracts — this provision requires a careful review of contract structure. If your standard contract commits consumers to three or five years of automatic payments without an annual cancellation window, it likely violates the Colorado statute.

Death and Disability Termination Rights

The Colorado statute includes a notable consumer protection provision: if a consumer dies or becomes permanently disabled, the auto-renewal contract must be released and terminated. Businesses must have a clear procedure for accepting documentation of death or permanent disability and for terminating the contract upon receipt of such documentation. Businesses must include information about this termination right in their consumer-facing disclosures.

Enforcement and Penalties

Unlike California’s ARL, which provides a private right of action allowing consumers to sue for violations, Colorado’s automatic renewal statute does not provide a private right of action. Enforcement is vested exclusively in the Colorado Attorney General under the Colorado Consumer Protection Act, Colo. Rev. Stat. section 6-1-112. The CCPA provides for civil penalties of up to $20,000 per violation and gives the Attorney General broad authority to seek injunctive relief and restitution for affected consumers.

The Colorado Attorney General has been active in pursuing auto-renewal enforcement actions, particularly against subscription box services, software companies, and media streaming services.

Interstate Commerce Considerations

If your business sells consumer products or services to Colorado residents — even if your business is not physically located in Colorado — the Colorado automatic renewal statute applies to those transactions. Online businesses must be aware that their auto-renewal practices must comply with the laws of each state where they have customers.

The consumer protection attorneys at Revision Legal advise businesses on automatic renewal law compliance across all fifty states. If you need a compliance review of your subscription contract terms, contact us at (855) 473-8474.